Part 3 of 3 - News and my muse (02Nov2026)
4 · News & My Investing Muse
The news that moves prices
● The Fed pauses, December loads. Two officials wanted a hike now; every economist polled expects one on 9 December. Treat the pause as a comma, not a full stop.
● Midterms Tuesday. All 435 House seats, a third of the Senate. The market question is narrow: who writes tax and tariff law for two years. History says divided government suits stocks and the fuss fades within days. Both sides call it existential.
Figure 12 — The midterm stakes as one side frames them (Elon Musk, X, 30 Oct 2026).
● Oil above US$100 is the common thread. Iran’s supply disruption sits behind the expected RBA and BoE hikes and behind the Fed’s two dissenters. Follow the chain to its human end — dearer oil means dearer diesel, fertiliser, freight and food. As Amartya Sen showed, famines are usually about people being priced out of food, not food running out. Watch affordability protests in import-poor countries this winter, not grain silos.
● Binance — reported US$6.3 billion hack. If it holds, the largest theft in crypto history — but the major wires hadn’t confirmed it at the time of writing. File under reported, developing. What matters: does the insurance fund cover customers, and does trust hold. Crypto did not need another 2022.
● Israel (fold in if it moves). Last Tuesday’s vote cost Netanyahu’s bloc its majority (53 / 48 / 19 of 120). Coalition bargaining is live — possibly the first Arab-backed government in Israel’s history. For markets: the shekel and oil. A weakened caretaker mid-conflict with Iran is an escalation risk OPEC cannot schedule.
● China PMI (rests until it prints Monday). September’s 52.1 was the year’s best; October lands Monday 09:45 SGT — the swing factor for Asian mood.
The Muse: the AI boom meets the real world
The money. The companies building AI are on the biggest spending spree in corporate history, and their own cash no longer covers it. Estimates put the industry’s borrowing and share sales near US$1.4 trillion through 2027 — about a third of what the US Treasury will issue in the same window (~US$4.1 trillion). When companies borrow that much, they compete with the government for the same savings, nudging rates up for everyone. Anthropic alone has committed to about US$430 billion of future computing, payable whether or not sales keep pace. Read the figure as direction, not precision — it mixes debt with equity.
Figure 5 — AI borrowing (~US$1.4tn) vs Treasury issuance (~US$4.1tn). Source: All-In Podcast.
Figure 6 — The capital-spending argument in full (Chamath Palihapitiya). Source: All-In Podcast, 31 Oct 2026.
The profits. Anthropic’s S-1 (filed 26 Oct, ticker ANT) is the clearest window we have: H1 revenue of US$16.3 billion — US$4.7 billion in Q1 to US$11.6 billion in Q2 (+147%) — the business turned an operating profit, and the compute cost of each revenue dollar fell from 97 cents to 48 cents. The headline US$80.75 billion loss looks alarming until you read it: US$72.4 billion is non-cash — IOUs to early investors grew more valuable as the company did, and the rules book that as a cost. The lesson travels: read the headline, then read what it’s made of. The caution comes from Steve Eisman, who says Q3 growth slowed from 147% to 45% — still roughly four-fold a year, so some slowdown is arithmetic, not failure. His number is an assertion until Anthropic refreshes the filing before pricing in mid-November. Watch the cost ratio: near 48 cents the model works; climbing, the bears have their case.
Figure 7 — Anthropic revenue and net loss, from the S-1. Source: company filing (26 Oct 2026).
The jobs. Microsoft has reportedly offered buyouts to 60,000 staff (~27% of its workforce) as AI absorbs tasks — alongside cuts at Amex (3,500), Barclays (5,000), eBay (9%) and Netflix (~1,000). A DeepMind paper last week argued AI’s impact would show up in pay and hiring first; the tape suggests “first” has arrived. It reframes Friday’s payrolls — a weak number now reads as automation biting, not just a cooling economy — and the people being automated out are voters, further up the ladder than globalisation’s. Expect the politics to get louder.
Figure 8 — Microsoft’s reported 60,000 buyout offers. Source: Kobeissi Letter, per Bloomberg.
Figure 9 — The fortnight’s AI-related layoffs. Source: ZeroHedge.
The politics. Days before the midterms, House progressives tabled a “No AI Bailouts” resolution — no federal rescue for bankrupt AI firms. A marker, not a law, but the question in Washington has moved from “is AI real?” to “who holds the risk?” Meanwhile the physical bottlenecks quietly decide whether the borrowing pays off: grids, transformers and turbines now carry multi-year waiting lists, and every new data centre bids up electricity. The AI boom and the cost-of-living crisis share a power cord. On open vs closed models: Anthropic’s quarter shows a closed, paid model doubling revenue while halving costs — the premium holds until open models reach coordination parity, which benchmarks barely measure yet. (Full argument parked for a standalone piece.)
Figure 10 — “No AI Bailouts” resolution. Source: David Dayen, The American Prospect, 28 Oct 2026.
Figure 11 — Coordination as the threshold to watch. Source: Google DeepMind, “Economics of Intelligence”.
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